HOW TO BUY LAND
AND
REAL ESTATE IN MEXICO
1993 -Mexico amends the constitution to allow foreigners to purchase real estate within the restricted zone by means of a fideicomiso, (bank trust) or a Mexican Corporation.
1994 -The NAFTA trade agreement between the United States, Canada, and Mexico is passed. A constitutional amendment allows corporations to be 100% foreign-owned. (A corporation may own property in a restricted zone without a fideicomiso.)
The bank is required to check ownership and insurance, and to verify that the property is free of liens. A trust is granted by submitting an application to the bank.
Taxes
Closing Process
The Notario Publico charges a fee for his services and the bank charges a fee as well. These fees should be competitive and are based partly on the value of the property.
Property insurance is available in Mexico and the rates are relatively low.
The information on this page is provided to inform the reader with an overview of the process of foreigners buying property in Mexico. It is not a substitute for qualified, up-to-date legal advice at the time of sale. Contact a Mexican attorney.
Brief overview of the process of Real Estate Ownership in Mexico. 1917 The Constitution of 1917 proclaimed that all land in Mexico would either be ejido (communal) or owned by Mexican nationals only. Ejido land was given to every village in Mexico and could not be sold. (There are some recent legal changes on this matter).
There is a fee of about US$2350.00 (varies from bank to bank) to obtain the fideicomiso and a annual fee as well of $550.00 USD. To obtain the fideicomiso, you will need your accepted purchase offer, a photo ID. The monetary transactions are handled through the bank.
The predial (property tax) is 0.1% of the assessed value, paid annually. The value of the real estate is determined at the time of sale. There is a 2% sales tax.
The closing process takes between 45 to 60 days. The buyer pays closing costs, which are usually about 7% of the purchase price. 2% is for sales tax and about 5% is for other fees such as title search, attorney's fees, and filing of legal documents.
The closing of a real estate transaction requires the services of a Notario Publico (Notary). The Mexican Notario Publico is an official who possesses greater rank and responsibility than the Notary Public in the United States. The Notario Publico is an attorney representing the Mexican government. He is responsible to both the buyer and the seller to insure the legality of the contract, and to the government for the collection of taxes and capital gains for the real estate transaction. The Notario Publico finalizes the real estate contract and records the transaction with the Public Registry. A real estate agent may be involved in the transaction, but it should be noted that realtors in Mexico are not licensed or regulated as they are in the United States.
Technically, it is not necessary to have the services of a lawyer in addition to the Notario Publico. However, for additional assurance that your interests are being protected, it may be advisable to hire your own Mexican lawyer.
They buyer will need to provide his address and telephone number in the country of origin, occupation, marital status, and nationality. If married, the same information is required of the spouse. The buyer's passport and tourist visa are required as well as the name, nationality, address and telephone number of any secondary beneficiary to the trust.
Property management agents are available to handle upkeep and bill-paying while the owner is away.
Insurance
American title insurance is available for Mexican real estate, but is not commonly used. The cost of title insurance depends on whether the property is covered by a "master title commitment".
In the past, real estate transactions in Mexico were all cash deals. More recently, different types of financing have become available.
